Leading advocates of country-by-country payments to governments reporting by oil, gas and mining companies have joined Publish What You Pay (PWYP) UK in calling on the United Kingdom government to continue to lead the global push for greater transparency in the extractive industries as part of the fight against corruption and for citizen empowerment in resource-rich countries.Open Society Foundations founder George Soros, US Senator Benjamin Cardin, former Vice-President of the European Parliament’s Economic & Monetary Affairs Committee Arlene McCarthy OBE, the Columbia Center on Sustainable Investment, UK MPs Caroline Flint (Labour) and Liberal Democrat Deputy Leader Jo Swinson, oil company Kosmos and PWYP UK have all made written submissions this month to the UK government.Greg Clark MP, Secretary of State at the UK Department for Business, Energy and Industrial Strategy (BEIS), is undertaking a review of the UK’s Reports on Payments to Governments Regulations, under which UK-registered and London Stock Exchange-traded extractive and forestry companies are required to report their payments to governments at project level for all countries where they operate. The review of the 2014 regulations is a statutory requirement. Mr Clark is due to report to Parliament on the conclusion of his review early in 2018.PWYP UK’s 46-page submission to the review emphasises the value of mandatory payment reporting in deterring corruption and fiscal mismanagement, preventing conflict, enhancing public understanding and citizen empowerment, and delivering business benefits for companies and investors. The submission includes 28 brief case studies highlighting civil society’s use of companies’ payment disclosures to promote accountability across the sector. Miles Litvinoff, PWYP UK Coordinator, commented: “In times of political uncertainty it is critical that the UK upholds its leading role in the fight against corruption and that progress towards a more open and accountable global extractives sector remains on course. Oil, gas and mining are notoriously corruption prone.”While commending the UK for its leadership on this issue, including for ensuring that companies’ disclosures are available to stakeholders in an open data format, PWYP UK has also identified areas where incomplete and inconsistent company reporting is occurring, and makes recommendations to the government to address weaknesses in the regulations and their implementation.Among other improvements, PWYP UK is calling for more clarity on requirements for project-level disaggregation, joint venture and payment-in-kind reporting; for full identification of recipient government entities; for disclosure of payments to governments for the sale of oil, gas and minerals; and for better accessibility of reports and clearer information for companies on how to report.“PWYP UK hopes that the government will take note of our recommendations to make the regulations more fit for purpose,” said Litvinoff.In her letter to the Secretary of State, Arlene McCarthy, who led negotiations on chapter 10 of the European Union Accounting Directive – on which the UK regulations are based – for the European Parliament, urges the UK government to “build on the gains made thus far – not only in the UK and the EU but also in Norway, Canada and the United States” and to continue “momentum for a greater degree of accountability in this historically opaque sector, where so much potential public benefit has in the past been squandered”.The UK regulations are part of a global standard of mandatory extractive sector transparency currently implemented in all 28 European Union member states, plus Canada and Norway, which complements the more voluntaristic (for governments) Extractive Industries Transparency Initiative. The original mandatory disclosure law, Section 1504 of the 2010 US Dodd-Frank Act, is yet to be implemented. Campaigns are under way in Australia, South Africa, Switzerland, Ukraine and other countries for similar extractive sector reporting laws.Jo Swinson MP was Minister for Employment Relations and Consumer Affairs and oversaw the UK regulations’ coming into force in 2014. Her letter says: “It was crucial at the time for the United Kingdom to deliver on its commitment … to advance global standards of transparency in the extractive sector”, and notes that “the comprehensive payment reports now being published by UK-regulated oil, gas and mining companies” are delivering “substantial public benefit”.Caroline Flint MP reminds the Secretary of State that “Oil, gas and minerals are finite resources that provide many developing countries with a relatively brief opportunity to mobilise domestic revenues on behalf of their populations, which will be necessary to meet the Sustainable Development Goals.”The submission by the Columbia Center on Sustainable Investment (CCSI), part of the Columbia University Law School, underscores investors’ need for “the global standard for payment transparency” that the UK regulations sustain. CCSI outlines “seven areas in which public payment data such as required by the UK Regulations may add material insight to investment analyses and improve investment environments”.According to US-based oil and gas exploration and production company Kosmos Energy, which listed on the London Stock Exchange in 2017: “We believe resource revenues are more likely to be managed in the best interests of a country if payments and receipts are made transparently, and if accountability measures are in place for the use of these revenues.”Extractive companies’ reports on payments to governments under the UK regulations are available online at https://extractives.companieshouse.gov.uk (UK-incorporated companies) and http://www.morningstar.co.uk/uk/NSM (London Stock Exchange main-market-traded companies). PWYP member organisation the Natural Resource Governance Institute has compiled much of the data from the UK and other jurisdictions in a central and searchable location at http://resourceprojects.org/.As well as accepting written submissions to the review, the UK government contracted PwC, one of the big four accountancy firms, to conduct stakeholder interviews with companies, investors, government officials and civil society. Members of the PWYP global coalition from sub-Saharan Africa, mainland Europe, North America and the UK took part in 10 interviews.PWYP UK looks forward to seeing Secretary of State Greg Clark’s report to Parliament on his conclusions in early 2018.See More

The London Stock Exchange’s (LSE) Alternative Investment Market (AIM) was launched in 1995 for smaller and growing international companies looking to raise capital for expansion. AIM describes itself as “the most successful growth market in the world”. The UK government has sung its praises. Lesser known than the LSE’s Main Market where larger, more established international companies’ securities are traded, AIM has over the years helped more than 3,700 companies raise more than £100 billion. Approximately 200 oil, gas and mining companies trade on AIM. Although generally smaller than LSE Main Market companies, AIM companies have grown over the years. AIM extractive companies’ combined market capitalisation runs into the billions of pounds, which can make them significant actors relative to the size of host country economies where many citizens are still desperately poor. They operate in 40 developing and transition countries, including 22 lower- and lower-middle-income countries as defined by the World Bank, and in all the BRICS. Fraud and corruptionThe LSE recently asked for views on proposed changes to the AIM rules, including rules of corporate governance. Investigations by Global Witness, Rights and Accountability in Development (RAID) and others have revealed significant cases of fraud, corruption and other abuses involving AIM extractive companies. The risks involved are acknowledged by the UK government: “The absence of good governance and the lack of transparency around [payments to governments] reduce the positive impact that extractive industries can have on economic development … [and] negatively impacts on, and increases the risk for, … companies and investors active in the extractives sector through civil unrest and poor business environment.” Publish What You Pay UK responded to the recent LSE consultation by proposing that all LSE AIM-traded oil, gas and mining companies be required to annually report their payments to governments following the same rules that apply to the 90-plus LSE Main Market-traded and large private UK-registered extractive companies now disclosing their payments each year under UK law. AIM extractive company reporting should meet the same requirements. The UK regulations’ £86,000 disclosure threshold, applied per single payment or series of related payments, will prevent AIM extractive companies from being unreasonably burdened by having to report inconsequential payments. Benefits of transparencyBenefits would be considerable. First, there would be consistency in addressing investor and reputational risk. The LSE already requires extractive companies to disclose payments to governments of more than £10,000 on applying for admission to AIM, as well as to annually report estimated reserves and resources. Regular payment reporting by AIM extractive companies will help citizens hold their governments to account for revenues received, better inform investors and improve the UK’s, the LSE’s and AIM’s reputation for corporate governance. The LSE’s discussion paper recognises AIM investors’ need to fully understand the businesses in which they invest and the associated risks. Payment to government disclosure helps investors make informed decisions and promotes confidence in the market. This is why large numbers of European and North American institutional investors and fund managers support both the EITI and mandatory public country-by-country project-level reporting. AIM needs to maintain appropriate levels of corporate governance as its traded companies grow in size and as expectations regarding corporate accountability rightly become more demanding. With a current average market capitalisation of approximately £50 million, AIM oil, gas and mining companies are far from small in the eyes of ordinary people, and not all AIM companies will plan to graduate to trading on the Main Market. These factors make it inappropriate to apply fewer transparency requirements to AIM extractive companies than to their Main Market counterparts. Public country-by-country project-level reporting is increasingly accepted as the industry norm. As Tom Butler, chief executive of the International Council on Mining and Metals (ICMM), said in early 2017: “[T]he global trend is in the [pro-transparency] direction. The train has left the station. It is driven by investors and other stakeholders and the desire of the industry to maintain its social license to operate. One way to maintain that is for everyone to see that the taxes and other payments the mining industry makes are applied sensibly to the development of the country.” No UK institution should be encouraging a race to the bottom in terms of corporate transparency standards. It is high time, then, for the LSE to extend annual payment disclosure beyond Main Market-traded extractive companies to AIM-traded ones. In the UK government’s words: “Shareholders, investors, employees, competitors, civil society groups, the media and other external stakeholders view companies’ disclosure of payments … as an example of principled leadership. … Regular … [r]eports on payments and revenues can improve the creditworthiness of both companies and countries.” Read PWYP UK’s submission to the AIM Rules Review 2017.First published at http://www.publishwhatyoupay.org/time-for-londons-alternative-investment-market-to-embrace-extractives-transparency/ ; See More

]]>Mon, 11 Sep 2017 15:47:56 +00000000000000584c6d0000000008ac56b27b04f62038850e00A blog post by Miles Litvinoff was featuredhttp://goxi.org/xn/detail/5786733:BlogPost:103201?xg_source=activity
A blog post by Miles Litvinoff was featured

Mandatory reporting by oil, gas and mining companies under European Union country-by-country disclosure laws began in the UK and France in 2016. Key aspects of the reporting requirements – which have equivalents in Norway, Canada and the USA – are especially useful in preventing corruption: granularity (disaggregation by project and by recipient government entity); comprehensiveness (all countries of operation without exemptions); and timeliness (the most recent financial year). Eighty-six extractive companies reported under UK law in 2016UK-incorporated extractive companies must disclose payments within 11 months of each financial year-end, and London Stock Exchange-listed (Main Market) extractive companies within 6 months (unless the LSE is their secondary listing). UK-incorporated companies must provide open and machine-readable data. For most in-scope companies, the first reporting deadline was 30 June 2016 (if LSE-listed) or 30 November 2016 (if UK-incorporated and unlisted). According to an assessment by PWYP UK and NRGI, by end-2016 disclosures of 2015 or 2015/16 payments to governments had been published by 86 UK-incorporated and/or LSE-listed oil, gas and mining companies (plus one forestry company). Prominent reporting companies include Anglo American, BG Group (now part of Royal Dutch Shell), BHP Billiton, BP, Cairn, Centrica, Gazprom, Glencore, Lukoil, Premier Oil, Randgold, Rio Tinto, Rosneft, Royal Dutch Shell, Soco, Total (main reporting obligation in France), Tullow and Vedanta. LSE-listed China Petroleum & Chemical (subsidiary of Chinese state-owned Sinopec Group) should have reported payments made in Angola and China but appears not to have. Payments in which countries?Disclosures from the above named 18 companies provide data on 84 host countries. These include resource-rich developing and transition states where extractive revenues may be hidden or associated with the “resource curse”, and developed economies that also may fail to gain optimal outcomes from resource extraction (see table). Example countryProminent companies disclosing payments under UK regulationsAngolaBP, Gazprom, TotalAustraliaAnglo American, BG Group, BHP Billiton, BP, Glencore, Rio Tinto, ShellAzerbaijanBP, TotalBrazilAnglo American, BG Group, BHP Billiton, BP, Premier Oil, Rio Tinto, Rosneft, Shell, TotalCanadaAnglo American, BHP Billiton, BP, Centrica, Glencore, Rio Tinto, Shell, TotalChina BHP Billiton, Shell, TotalDemocratic Republic of CongoGlencore, Soco, TotalEquatorial GuineaGlencore, TullowGabonShell, Total, TullowIndia BG Group, BHP Billiton, BP, VedantaIndonesiaBHP Billiton, BP, Premier Oil, Rio Tinto, Shell, TotalIraqBP, Shell, TotalKazakhstanBG Group, Gazprom, Glencore, Lukoil, TotalKenyaBG Group, Total, TullowMalaysiaBHP Billiton, Shell NigeriaShell, TotalPeruAnglo American, BHP Billiton, Glencore, Rio TintoPhilippinesShell, TotalQatar BP, ShellRepublic of CongoSoco, Total, TullowRussiaBP, Gazprom, Lukoil, Rosneft, TotalSouth AfricaAnglo American, Glencore, Rio Tinto, Total, Tullow, VedantaTanzaniaBG Group, BHP Billiton, GlencoreUKBG Group, BHP Billiton, BP, Cairn, Centrica, Gazprom, Premier Oil, Shell, Total, TullowUSAAnglo American, BHP Billiton, BP, Rio Tinto, Shell, VedantaZambiaAnglo American, Glencore, VedantaZimbabweAnglo American, Rio Tinto How good is the reporting?This growing body of extractives data is essential – if not sufficient – to inform citizens, civil society, journalists and parliamentarians about the revenues generated by exploitation of their countries’ natural resources, how well the money compensates for negative social and environmental impacts and which government entities get paid (see PWYP’s Chain for Change). The first year’s reporting in the UK needs improvement, however, and company disclosures are not always complete. Difficulty in locating some reports and lack of open dataAll UK-incorporated companies’ reports are available online in open data from Companies House, but there is no annual index; site users need to insert a blank space in the search box to produce a list of reports. LSE-listed companies’ disclosures currently lack a central location, making it hard to know how many have reported, and need not be in open data format. (Similar challenges occur with companies reporting in France.) LSE-listed companies are required to announce their report on the National Storage Mechanism but many do not, and none have used the correct classification. However, all LSE-listed companies will be required to upload their reports centrally in open data from 2018. Over-aggregated or omitted dataSeveral companies have broadly – and geographically – aggregated data for multiple different oil and gas fields or mines: Shell (“Gulf of Mexico (West)”, “Northern North Sea”, “Sabah Inboard and Deepwater Oil”, “SPDC East”, “UK Offshore”); BHP Billiton (“Gulf of Mexico”); BP (“Gulf of Mexico Central”); Glencore (“DRC Copperbelt Region”). Very broad project aggregation may result in companies hiding suspect payments and arguably contravenes the law’s purpose. Other companies fail to identify the government entities they pay, which PWYP considers a legal infringement. Lukoil lumps together payments to unnamed “state authorities”. Aggregate Industries (part of LafargeHolcim, which reports in France) identifies only unnamed “national” or “regional/local” governments. Petrofac initially failed to identify government entities but subsequently corrected this. Companies are required to specify in-kind payments by value and volume and to explain how the value was determined. To verify price per barrel, value should be divisible by volume. However, Shell has for at least one project in Nigeria combined oil and gas in-kind payments in a single figure, making the price per barrel for each incalculable, and when requested declined to fully clarify. Petrofac originally combined cash and in-kind payments in Tunisia in a single uncheckable figure but then amended its report. BP omits payments by non-subsidiary joint ventures (JVs), and Shell excludes payments by JVs over which it has joint control. Given the frequency of JVs in resource extraction, and because JV production entitlements are often the largest payment to a government, non-reporting of JV payments by non-operating partners – which could be reported proportionately – will leave large sums of money undisclosed. Disclosures by Total and some other companies contain omissions of certain types of payments that require further investigation. What next?Civil society has been active in accessing and analysing the data, including via PWYP’s Data Extractors programme and PWYP US’s Extract a Fact site. Our work with the data will be the subject of future blogs. The UK will review its regulations in 2017, followed by the European Commission’s EU-wide review in 2018. Civil society needs to engage with these processes to defend the value of mandatory reporting and, where possible, persuade policy makers to close loopholes and strengthen the law.First published at http://www.publishwhatyoupay.org/extractive-companies-publish-worldwide-payments-under-uk-law/ ;See More

Mandatory reporting by oil, gas and mining companies under European Union country-by-country disclosure laws began in the UK and France in 2016. Key aspects of the reporting requirements – which have equivalents in Norway, Canada and the USA – are especially useful in preventing corruption: granularity (disaggregation by project and by recipient government entity); comprehensiveness (all countries of operation without exemptions); and timeliness (the most recent financial year). Eighty-six extractive companies reported under UK law in 2016UK-incorporated extractive companies must disclose payments within 11 months of each financial year-end, and London Stock Exchange-listed (Main Market) extractive companies within 6 months (unless the LSE is their secondary listing). UK-incorporated companies must provide open and machine-readable data. For most in-scope companies, the first reporting deadline was 30 June 2016 (if LSE-listed) or 30 November 2016 (if UK-incorporated and unlisted). According to an assessment by PWYP UK and NRGI, by end-2016 disclosures of 2015 or 2015/16 payments to governments had been published by 86 UK-incorporated and/or LSE-listed oil, gas and mining companies (plus one forestry company). Prominent reporting companies include Anglo American, BG Group (now part of Royal Dutch Shell), BHP Billiton, BP, Cairn, Centrica, Gazprom, Glencore, Lukoil, Premier Oil, Randgold, Rio Tinto, Rosneft, Royal Dutch Shell, Soco, Total (main reporting obligation in France), Tullow and Vedanta. LSE-listed China Petroleum & Chemical (subsidiary of Chinese state-owned Sinopec Group) should have reported payments made in Angola and China but appears not to have. Payments in which countries?Disclosures from the above named 18 companies provide data on 84 host countries. These include resource-rich developing and transition states where extractive revenues may be hidden or associated with the “resource curse”, and developed economies that also may fail to gain optimal outcomes from resource extraction (see table). Example countryProminent companies disclosing payments under UK regulationsAngolaBP, Gazprom, TotalAustraliaAnglo American, BG Group, BHP Billiton, BP, Glencore, Rio Tinto, ShellAzerbaijanBP, TotalBrazilAnglo American, BG Group, BHP Billiton, BP, Premier Oil, Rio Tinto, Rosneft, Shell, TotalCanadaAnglo American, BHP Billiton, BP, Centrica, Glencore, Rio Tinto, Shell, TotalChina BHP Billiton, Shell, TotalDemocratic Republic of CongoGlencore, Soco, TotalEquatorial GuineaGlencore, TullowGabonShell, Total, TullowIndia BG Group, BHP Billiton, BP, VedantaIndonesiaBHP Billiton, BP, Premier Oil, Rio Tinto, Shell, TotalIraqBP, Shell, TotalKazakhstanBG Group, Gazprom, Glencore, Lukoil, TotalKenyaBG Group, Total, TullowMalaysiaBHP Billiton, Shell NigeriaShell, TotalPeruAnglo American, BHP Billiton, Glencore, Rio TintoPhilippinesShell, TotalQatar BP, ShellRepublic of CongoSoco, Total, TullowRussiaBP, Gazprom, Lukoil, Rosneft, TotalSouth AfricaAnglo American, Glencore, Rio Tinto, Total, Tullow, VedantaTanzaniaBG Group, BHP Billiton, GlencoreUKBG Group, BHP Billiton, BP, Cairn, Centrica, Gazprom, Premier Oil, Shell, Total, TullowUSAAnglo American, BHP Billiton, BP, Rio Tinto, Shell, VedantaZambiaAnglo American, Glencore, VedantaZimbabweAnglo American, Rio Tinto How good is the reporting?This growing body of extractives data is essential – if not sufficient – to inform citizens, civil society, journalists and parliamentarians about the revenues generated by exploitation of their countries’ natural resources, how well the money compensates for negative social and environmental impacts and which government entities get paid (see PWYP’s Chain for Change). The first year’s reporting in the UK needs improvement, however, and company disclosures are not always complete. Difficulty in locating some reports and lack of open dataAll UK-incorporated companies’ reports are available online in open data from Companies House, but there is no annual index; site users need to insert a blank space in the search box to produce a list of reports. LSE-listed companies’ disclosures currently lack a central location, making it hard to know how many have reported, and need not be in open data format. (Similar challenges occur with companies reporting in France.) LSE-listed companies are required to announce their report on the National Storage Mechanism but many do not, and none have used the correct classification. However, all LSE-listed companies will be required to upload their reports centrally in open data from 2018. Over-aggregated or omitted dataSeveral companies have broadly – and geographically – aggregated data for multiple different oil and gas fields or mines: Shell (“Gulf of Mexico (West)”, “Northern North Sea”, “Sabah Inboard and Deepwater Oil”, “SPDC East”, “UK Offshore”); BHP Billiton (“Gulf of Mexico”); BP (“Gulf of Mexico Central”); Glencore (“DRC Copperbelt Region”). Very broad project aggregation may result in companies hiding suspect payments and arguably contravenes the law’s purpose. Other companies fail to identify the government entities they pay, which PWYP considers a legal infringement. Lukoil lumps together payments to unnamed “state authorities”. Aggregate Industries (part of LafargeHolcim, which reports in France) identifies only unnamed “national” or “regional/local” governments. Petrofac initially failed to identify government entities but subsequently corrected this. Companies are required to specify in-kind payments by value and volume and to explain how the value was determined. To verify price per barrel, value should be divisible by volume. However, Shell has for at least one project in Nigeria combined oil and gas in-kind payments in a single figure, making the price per barrel for each incalculable, and when requested declined to fully clarify. Petrofac originally combined cash and in-kind payments in Tunisia in a single uncheckable figure but then amended its report. BP omits payments by non-subsidiary joint ventures (JVs), and Shell excludes payments by JVs over which it has joint control. Given the frequency of JVs in resource extraction, and because JV production entitlements are often the largest payment to a government, non-reporting of JV payments by non-operating partners – which could be reported proportionately – will leave large sums of money undisclosed. Disclosures by Total and some other companies contain omissions of certain types of payments that require further investigation. What next?Civil society has been active in accessing and analysing the data, including via PWYP’s Data Extractors programme and PWYP US’s Extract a Fact site. Our work with the data will be the subject of future blogs. The UK will review its regulations in 2017, followed by the European Commission’s EU-wide review in 2018. Civil society needs to engage with these processes to defend the value of mandatory reporting and, where possible, persuade policy makers to close loopholes and strengthen the law.First published at http://www.publishwhatyoupay.org/extractive-companies-publish-worldwide-payments-under-uk-law/ ;See More